American Tea Room Plans Expansion

BEVERLY HILLS, Calif. – American Tea Room is proof positive the trickle-down theory of investing has merit – at least in the red hot tea segment.

David Barenholtz Founder David Barenholtz is one of the most successful independent tea shop owners in North America. His American Tea Room, located on a busy Beverly Hills street corner is known for exquisite teas and tea ware. The shop 401 N. Cañon Drive, Beverly Hills carries 155 teas and 60 botanicals. Teas are made in various styles including on a new BKON Craft Brewer.

Last week he announced that he will spend $1.5 million to expand the current location and then build a new 5,600 sq. ft. store at 909 S. Santa Fe in the heart of the Los Angeles Arts District. The new store will have a tasting room, carry a similar inventory and serve as headquarters.

He said the new store will also have a liquor license and he is already working with an internationally known mixologist to infuse a range of base alcohols. The store will also present tea-inspired foods, he said.

Barenholtz has one of the highest transaction averages in the business at $87, more than double Teavana [which opened its newest location a few blocks away last week].  He first began retailing tea in 2003 and launched American Tea Room in 2008. The company has seen a 30% increase in online sales since 2006.

It’s not unexpected that an outside investor and tea lover would take note of his success.

“People with money are noticing that tea is a great opportunity,” he said. Ultimately he would like to expand his venture to between 40 and 50 stores, he said.

Barenholtz began his venture as a French-owned franchise but established himself as a skilled blender with an American sensibility. “I did not like flavored tea and rarely use flavors. Our coconut and black tea is made with coconut and black tea. I use the best ingredients and I experiment. “It’s all about taste,” said Barenholtz.  There is not much tea grown in America, he said, “what I look for is a global influence of tea and bring it to America.”

Competing with the Europeans; Germans and French and Japanese for teas like first flush Darjeeling is no less expensive but it is getting easier as suppliers recognize that Americans are willing to pay top dollar for quality tea, he explained. This spring American Tea Room paid about $300 per kilo for black whole leaf tea and up to $200 per kilo for oolongs with some teas commanding $400 per kilo, prices that are 100-times greater than tea sold at auction.

As to the new Teavana opening nearby.

“I see no harm from Teavana. It is not what we are doing,” he said, citing a selection that is double what the typical Teavana store carries. “They only bring greater awareness to tea,” he said.